And will make ownership more affordable for first-time buyers.
The Hong Kong government has unveiled plans to raise property taxes on high-end homes. The innovations will affect wealthy owners and landlords of multiple properties.
Sales of luxury housing in Hong Kong have reached an all-time high. Mostly at the expense of foreign investors. Prices are rising steadily.
Finance Minister Paul Chen has proposed a gradual increase in the tax rate for Hong Kong’s most expensive homes. This would replace the standard tax of 5 per cent of the annual rental value of the property.
The plan would affect about 42,000 homes, or 2% of the total number of private residential properties. The change is expected to generate about $97.4 million in government revenue a year when it takes effect in 2024.
While the property tax would apply to all homeowners, the change could mainly affect large owners with luxury rental homes, said Bloomberg Intelligence real estate analyst Patrick Wong.
The government’s plan to raise property tax comes after a similar announcement by Singapore, which plans to generate about $283 million in tax revenue annually.
At the same time, the Hong Kong government plans to simplify home ownership by allowing first-time buyers of more expensive properties to pay a down payment of 10%. Under the new policy, the Hong Kong Mortgage Corporation will insure loans on homes worth up to $1.3m, up from $1m at present.
According to Oldypak Capital LP real estate 2022 report, the policy will lead to an immediate increase in the volume of transactions. But the expert believes prices could remain at current levels because of the Covid situation and the less positive economic outlook.